The effects of gallery and artist reputation on prices in the primary market for art
AbstractThis paper advances a decision theoretical foundation for pricing scripts by means of a simple model of product differentiation implementing the undercut-proof equilibrium concept. We argue that while sociological factors play undoubtedly an important role, economic analysis can complement the insights from economic sociology on pricing in the primary art market. Our model analyzes the effects of the gallery's and the artist's reputation on the price the gallery charges. The results suggest that prices positively correlate with an artist's reputation and negatively correlate with a gallery's reputation. The model may therefore explain the results of recent empirical studies that have led to similar results.
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Bibliographic InfoPaper provided by Vienna University of Economics, Department of Economics in its series Department of Economics Working Papers with number wuwp090.
Date of creation: May 2005
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Find related papers by JEL classification:
- Z11 - Other Special Topics - - Cultural Economics - - - Economics of the Arts and Literature
- L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms
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IZA Discussion Papers
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- Barbosa, Renata Leite & Campos, Nauro F, 2008. "Paintings and Numbers: An Econometric Investigation of Sales Rates, Prices and Returns in Latin American Art Auctions," CEPR Discussion Papers 6806, C.E.P.R. Discussion Papers.
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